sudhakarsaraswathi
Dear Sirs,
I request you to kindly advise me on the following matter. Your valuable guidelines will be of great help to me.

A contract-manpower supply has been awarded to a private company in a Government of India Department, and it is not a PSU. This company has taken contract labour license from Central Labour Machinery, ie. Asst.Labour Commissioner-Central after getting Form-V from the Principle employer-Department of Space, Govt.of India. As the principle employer is a department of government of India, the company is paying minimum wages to their workmen, highly skilled, skilled, semi-skilled and unskilled as notified by the Chief Labour Commissioner-Central, New Delhi. In the recent past, principle employer formed a committee for wage rates of above categories, and issued a circular and demanding us to implement the said wage rates instead of minimum wages notification issued by CLC-Central, saying that they fixed fair wages which are little bit high. They mentioned in the circular that their wage rates are with retrospective effect from 1.4.2021. Upto 31.3.2022, private company being a contractor paid CLC-Central notified wages. When this matter was brought to the notice of principle employer, they said that contractor should pay the wages as mentioned in the circular from 1.4.2021. In fact, as per minimum wages act, private contractor has to pay wages to their workmen as per CLC-C notification which are being revised for every six months taking into consideration of cost of living index. When this fact is notified to the principle employer, still they are insisting to give arrears to contract employees betwen govt notified wages and fair wages (as per their circular). Contractor is ready to pay fair wage w.e.f. 1.4.2022, but principle employer is not agreeing.

Could you please suggest legally so that reply can be given to principle employer.
Waiting for your suggestions plz.

From United States, Cambridge
PROFESSIONALS AND BUSINESSES PARTICIPATING IN DISCUSSION
Saswatabanerjee
Partner - Risk Management
Sudhakarsaraswathi
General Manager (accounts & Admn.)
KK!HR
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saswatabanerjee
2355

The answer depends on the contract you have signed with the contractor.
If the contract says he has to pay wages as specified in the circular and he has been paying lower, then he is liable to pay the arrears.

In most cases, contractor pays its workers based on the amount they get from the principal employer. So the question is more on whether the contractor was profiteering by knowingly giving lesser wages? If not, then the PE should be willing to pay the differential wages since they themselves spent lower than their own budget.

The actual answer can give given after reviewing the documents and the facts of the case

From India, Mumbai
sudhakarsaraswathi
Dear Saswatabanerjee

Thanq very much for your timely response. In the contract document or work order, the clause is that contractor should pay minimum wages. Accordingly the minimum wages as notified by the CLC-Central are paid. There is no dispute in this. Contractor is paying the minimum wages as per the notification.

Now a days, we are hearing FAIR WAGES--means the wage as decided by the Department of Space through an internal committee. Taking into consideration of State Minimum wages/District level committee minimum wages, this fair wage is decided, just more than the minimum wages notified by the CLC-Central. In fact committee decided these rates on 1.4.2021, but circular has been issued in Feb, 2022. By the time of issue of this circular, contractor paid minimum wages as per the notification issued by Chief Labour Commissioner-Central and continue to pay up to 31.3.2022. Therefore contractor informed principle employer that he will implement fair wage w.e.f. 1.4.2022. In the contract document also, there is no mention of this fair wages, but minimum wagers as notified by the appropriate government. As principle employer is of Central Government Department, and contractor has taken licence from ALC-Central, contractor is paying minimum wages to his labour as per the notification issued by CLC-C from time to time.

Hence kindly suggest plz.

Regards

From United States, Cambridge
saswatabanerjee
2355

I am assuming this contract is a standard contract labour format, where the contractor gets wages plus a service charge.
In that case, if the contractor is being asked to pay additional salary by the PE, the PE must give that additional amount to the contractor.

Therefore the contractor must ask for a modified PO or a modified contract, raise an invoice for the differential wages of the period in question and then pay the same as arrears to the workers.

Beyond that, no contractor can take up a legal case against the PE if they want to remain in business. Its a question of sitting across the table and getting the commercials thrashed out

From India, Mumbai
sudhakarsaraswathi
Benerjee sab,

Thank you for your reply. Principle employer is not willing to amend the P.O. terms, but asking us to absorb the difference between min wage and fair wage (which is say Rs.5 per day per person) from the service charges. As you said will sit with P.E and come to a conclusion. Any way thanks.

Regards

From United States, Cambridge
sudhakarsaraswathi
Dear Sirs,
I need one more clarification. For Department of Space, Govt of India, when a contractor is engaged and taken contract labour licence from central labour machinery, which one is the appropriate government to follow minimum wages. Is 2a of ID applicable in this case plz.

Shall b much thankful, if a reply is given plz.

Regards

From United States, Cambridge
saswatabanerjee
2355

To answer the first part,

(b) "appropriate Government" means,-
(i) in relation to any scheduled employment carried on by or under the authority of the Central Government, or a railway administration, or in relation to a mine, oilfield or major port, or any corporation established by [a Central Act], the Central Government, and
(ii) in relation to any other scheduled employment, the State Government;

So I think in your case, the Appropriate government is the Central Government, so you need to follow minimum wages notified by CLC Central. The link to the site is here : https://clc.gov.in/clc/min-wages

On the second question, I am not absolutely sure, but basic reading of the act indicates that 2A will be applicable to the contractor. However, in reality, the Labour Officer will be free to include the PE as party to the dispute by looking at the facts of the case, which will probably show that you have control over the workings of the contract labour.

But I would wait for other members of the forum to confirm or correct that for me.

From India, Mumbai
KK!HR
1367

I endorse the views expressed by learned senior member Saswat Sir on the issue of the Central Govt as the appropriate government and the applicability of the Central Government notified minimum wages in the matter.
As regards Section 2 A of ID Act 1947, it has no linkage with minimum wages. Section 2 A deals with the dismissal, etc., of an individual workman to be deemed to be an industrial dispute.

From India, Mumbai
sudhakarsaraswathi
Thank you sir for yr clarification. Noted with thanks.
From United States, Cambridge

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